The First Deputy Governor of the Central Bank of Russia (CBR) has spoken out at a recent online meeting, reported by Russia Today (RT), on the topic of digital currencies challenging and obsolete the international payment system SWIFT.
Digital currencies can challenge and even replace the SWIFT system
According to Olga Skorobogatova, the development of digital coins makes international bank payment systems are a matter of debate, as such a traditional logic could become obsolete.
She supported her comments that more than 30 financial regulators are “currently working on their national digital currencies.” She also believes that different countries can launch their cryptos in the next 5-7 years. Skorobogatova said:
Then we can solve direct integration problems. In this case, SWIFT may not be necessary as it is a different kind of technological interaction. However, the global banking network could become one of the platforms for the new form of national currency.
However, in order to achieve full integration of digital currencies, the CBR Deputy Governor believes that security must be fully guaranteed in the technology behind cryptocurrencies before considering launching a new global transaction network.
An alternative crypto-based global payment network to bypass sanctions?
The RT report also adds to Skorobogatova’s words that Russia is working to respond to ongoing threats to drive the country out of the SWIFT system as “some Western politicians have threatened to disconnect Russian banks from the network” as part of a series of sanctions.
The SWIFT system is used in more than 200 countries among 11,000 financial institutions to arrange cross-border payments. Yet the biggest drawback to processing transactions over such networks is the slowness and high costs involved.
The Central Bank of Russia is working on its own CBDC, digital ruble, as they plan to run a series of tests similar to China’s.
Already five Russian banks expressed interest in participating in the CBDC pilot: Credit Bank of Moscow, Promsvyazbank, Bank Zenit, Dom.RF and Russian National Commercial Bank. The State Duma, the lower house of the Federal Assembly of Russia, expects the digital ruble experiment to start in the first half of 2021.
Do you agree with the words of the CBR Deputy Director? Let us know in the comments below.
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